Beware Bond-Market Mood Swings

From hero to zero in just 10 days: May's selloff has seen year-to-date gains for holders of U.S. Treasurys, German bunds and U.K. gilts wiped out and turned to losses. Some are asking if this is a definitive turning point for the bond market after its 30-year bull run. It isn't clear yet that global yields have hit bottom—but it is clear that bonds are becoming hypersensitive to the smallest twists and turns in the economy.

The turn in mood has been sharp. On May 2, after the European Central Bank cut rates and hinted...